Posted April 7, 2009 11:00 am by with 5 comments

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It looks like the biggest April Fool’s Joke was on all of us. Despite persistent rumors that Google was in talks to acquire Twitter (the coolest thing since the last coolest thing since sliced bread), no deal is forthcoming. On its blog, Twitter explains that sometimes they tease talk.

While all this may be protesting too much from both parties, sources are now saying that Twitter CEO Evan Williams wouldn’t sell for a billion dollars, four times what Google is rumored to have placed the microblogging service’s value at.

When it comes to Internet businesses, though, Twitter needs to remember that timing is everything. If their endgame is acquisition, there are a few points they might want to keep in mind:

  • the economy is down
  • the mainstream (and less mainstream) media hasn’t yet turned on Twitter (as it has with previous darlings, including MySpace and Facebook)
  • Twitter doesn’t have a (publicly-discussed) business model

Google has, of course, paid top-dollar for big-ticket properties before. But although its biggest purchase, the $1.65B YouTube, continues to dominate its niche, Google is still struggling to monetize the most popular video site in the world. Are they prepared to take a chance on another service that doesn’t have a concrete way to turn a profit?

BoomTown’s Kara Swisher points out that Twitter could well be worth the price tag—with one caveat:

It is clear that it is onto something significant and perhaps even something quite profitable someday.

That is, providing its execs focus on what’s important—building Twitter’s business and audience—and trying as hard as they can to ignore all the noisy and pointless tweeting from and about its many suitors.

If they can’t, though—and it would be a crying shame—they should just start responding to all those pretty swains and sell out to the highest and most attractive bidder.

Personally, I am hoping they pick the former, as Twitter is turning out to be yet another of Silicon Valley’s great stories of possibility and promise.

Personally, I think it’s a bit soon to say that about Twitter (I Tweet, but I haven’t drunk the Kool aid yet—I could take it or leave it). I think the company’s hype is influencing this (ahem, timing). Back in February, she made a bit more evenhanded assessment:

Twitter—while it says it is poised on the verge of announcing its grand plan to make money—is operating in an arena I have seen many other shooting stars in, traversing a very dangerous crevasse of hype and expectation.

Due to that, it has a very big red target on its back, one that a competitor in the status space—such as the spurned Facebook, whose update business is much bigger—will not ignore.

Right now, Twitter could ask for a lot, as one of the only Web 2.0 companies that everyone is uniformly excited about.

That’s one I can agreement. Right now, Twitter could ask for a lot. But I hope they’ve seen examples of other media-sweetheart social companies holding out for top dollar—only to end up losing their valuation momentum.

What do you think? Should Twitter hold out for either a higher price tag or a viable business model (which would probably garner a higher price tag anyway), or should they take what they can get now?

  • 1 billion??? Not accepted?? Incredible… They must have some big plans.

  • Pingback: 66 Awesome Twitter Articles()

  • In this economy, take the money.

  • Wow, I’d take it and run…

  • RJ

    That’s a lot of money, if that was even on the table, but coming up with another program / idea / etc the size of Twitter right now — that’s hard to imagine. I’ll bet being able to say that you came up with Twitter, run Twitter, etc. is quite rewarding in and of itself — watching a program take off in popularity is kind of like watching a child grow up, and the attachments can be somewhat similar as well.

    RJ’s last blog post..Mother’s Day PLR – New Article Package